Field Notes Include

10th September 2020 – This week’s headlines

Animal Welfare Cattle ship capsize: Role of live export trade under intense scrutiny [05 September, The Country]

Apiculture Taupō's King Honey buzzing after manuka honey tops London awards [03 September, The Country]

International A race to save bananas from extinction: Wageningen and KeyGene join fight against Panama disease

Research & Development [08 September, Food Navigator] Company finds 'holy grail' of stimulating plant growth [02 September, Stuff NZ] New gene-editing test a 'game changer' for New Zealand [08 September, One News]

© 2020 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International Cooperative (“KPMG International”).

- What happens if we get it wrong? Defining regenerative agriculture - - What if it is too narrow? - How do we get people to truly where to begin? understand the philosophy of

regenerative? The debate about ‘regenerative agriculture’ is really starting to get exciting! It is a big and - What happens if ‘regenerative’ just complex idea that is challenging the thinking of becomes a marketing tool with no our communities, from grass-roots to board substance behind it? table. It is evident that regenerative is a strongly emotive topic that means something Instead of focusing on a definition of different to everyone. regenerative, let’s focus on the end goal of Fit for a Better World: the continual improvement There are calls for ‘regenerative agriculture’ to of our food production systems and eco- be defined urgently so that industry and systems health. Government can align and respond strategically. Yes, a definition will aid Continuous improvement is what all farmers investment in research, extension, marketing strive for and using ‘regenerative’ principals is and brand positioning – but how do we define how many believe they can take their farming something so complex? business to a new level of sustainability. Numerous groups of farmers have already To me the term ‘regenerative’ is multi-faceted come together around New Zealand through and encompasses the health of our planet eco- Action Network Groups and via Facebook systems (humans included). It is such a big and pages such as Quorum Sense, to explore complex idea that neatly articulating what it regenerative principles and share learnings. A means in one sentence seems near impossible global network is already forming where – and potentially risky! information about regenerative is being shared farmer to farmer.

Although there is a lot of science lacking around regenerative principles specific to the New Zealand context, many producers are excited about the concepts - they are innovating and trialling new techniques and are getting some intriguing results.

Customers are showing a growing interest in regenerative and wanting to understand what New Zealand is doing to produce food and fibre regeneratively. This is a great opportunity to capture more value in the supply chain through our focus on continuous improvement. A great example of this is The New Zealand Merino Company which is in the process of developing the ZQrx standard which recognises producers operating at the highest standard and continuously striving for excellence in sustainability.

If industry truly wants to support the ‘regenerative movement’ and are committed to the goal of Fit for a Better World, we need to provide adequate funding for our leading scientists and producers to work together to identify what science and extension is needed to understand how regenerative principles can be applied and how they perform in the New Zealand context.

Let’s foster a culture of continuous improvement through being curious, allowing the freedom to try something new and the courage to share – this is how we will reach our goal of Fit for a Better World. The science and a definition will come in time

Genevieve Steven Farm Enterprise Consultant KPMG Private Enterprise

Agribusiness Animal Welfare

Rural businesses vulnerable to hack attack [03 Livestock ship with two Kiwis on board lost an September, Farmers Weekly] engine and capsized, survivor says [03 A lack of security technology investment and an September, Stuff NZ] increasing number of sophisticated assaults are A livestock ship Gulf Livestock 1, with two putting many agribusiness firms and farms at New Zealanders along 43 people and 5800 risk of cyber-attacks. A recent 2degrees survey cattle on board, went missing during a typhoon shows 52% of small to medium agribusinesses in waters off Japan and is being searched for lack security resources such as a firewall to by rescuers. The Ministry for Primary Industries protect business data. Cyber security agency has temporarily suspended its consideration of CertNZ reports attacks on NZ businesses cattle livestock export applications as a result. increased 38% since 2018, commonly are Agriculture Minister Damien O'Connor said a conditional ban on lives cattle export is an phishing, credential harvesting, scams and fraud. option being considered as it is a risky area and CertNZ’s website provides some tips to reduce may damage New Zealand’s brand on animal cyber vulnerability: install software updates,use wellbeing. 2-factor authentication, backup data, and secure your devices. Cattle ship capsize: Role of live export trade under intense scrutiny [05 September, The Country] Covid 19 coronavirus: Border rules exacerbate Despite calls for policy review on live export vet shortage [03 September, The Country] trade after the capsizing of the cattle ship Gulf A survey by New Zealand Veterinary Association Livestock 1, the government will not release shows that border restrictions are worsening the the review outcomes before the election. issue of a shortage of veterinarians, with a Prime Minister Jacinda Ardern says the live potential shortfall of 200 to 220 in the workforce. export has been temporarily suspended as a Before the profession is added to the long-term result of the loss at sea, and she would not skill shortage list, Massey University suggested pre-empt the review outcome on the banning. the problem of not having sufficient specialist veterinarians to provide training to have significant impact in the long-term. NZVA’s Apiculture primary concerns are the stress and human welfare impact, as well as the animal welfare due to this shortage. Taupō's King Honey buzzing after manuka honey tops London awards [03 September, AbacusBio signs deal with Bayer [09 The Country] September, Otago Daily Times] Taupō-based King Honey recently became the Dunedin-founded consulting company fourth-largest honey business in New Zealand, AbacusBio has partnered with multinational and received international recognition for its company Bayer to develop predictive plants for Bee+ Manuka Honey at the London Honey anticipated future market needs. The Awards. The company is experiencing strong partnership will combine Bayer’s “global growth in international markets for manuka powerhouse” with AbacusBio’s expertise in honey as consumers seek the health benefits trait prioritisation and valuation, which could linked with it during the covid-19 pandemic, improve predictions on plant breeding that according to King Honey’s COO Chris better meet production, quality and Bowman. sustainability needs.

Aquaculture Fonterra drops to sixth in global dairy rankings [04 September, Farmers Weekly] Fonterra Co-operative Group dropped from fourth to sixth in the Rabobank’s annual Global CH4 Global nets $4.45m to harvest seaweed in Dairy Top (GDT) 20 report, and the top two are Southland [01 September, Stuff NZ] Nestle (Switzerland) and Lactalis (France). CH4 Global will spend $4.45 million to farm Fonterra says the greater environmental constraints on its suppliers had limited growth, Asparagopsis armata, a methane-reducing red along with the asset consolidation that seaweed found on Stewart Island. The seaweed impacted its year-on-year sales in US dollars may help to absorb waste by-products from and Euros. salmon farming, and it would be used to create a stock supplement that could reduce methane emissions from livestock by 90%. Questions raised over health benefits of Lewis Road Creamery collagen-infused milk [08 Marlborough Sounds mussel farm getting September, Stuff NZ] boost from floating electronics [09 September, Dairy company Lewis Road Creamery is having One News] to retract information from its website related Pioneer marine farmer Graeme Clarke had his to claims of health benefits in its latest mussel farm in Crail Bay installed with a sensor collagen-added milk product. The company system that records information such as stated on its website that collagen could temperature and salinity for the user to access provide scientifically-proven benefits for joint anytime online. It is part of a Marlborough health, but was removed after receiving a District Council project of using smart complaint from Consumer New Zealand. Lewis technology to benefit aquaculture and the Road Creamery said the material was environment. The council has applied for published in error and agreed to not make funding to scale the project, aiming to enable specific health claims until permitted by the commercial and research groups to share their Food Standards Code, these claims did not data in a single location. appear on the product packaging.

Sexed semen demand surges among farmers [07 September, Farmers Weekly] Dairy The higher demand for heifer than bull calves and a trend towards reduced bobby calves from farmers is driving a surge in demand for sexed semen in the dairy industry. Sexed Coronavirus 'literally trimming fat' from butter semen is a useful tool for proactive farmers to and cream prices [02 September, Stuff NZ] mitigate consumer, environmental and animal Dairy auction prices had the third consecutive welfare concerns, according to Malcolm Ellis, fall of 1% on Tuesday, with whole milk powder LIC general manager of New Zealand markets. dropped 2% and butter dropped 1.2%. Westpac senior agri-economist Nathan Penny said Covid-19 was “literally trimming fat” from prices, as the post-covid period experienced an over 20% decrease in milk fat price, which is at their lowest since mid-2016.

Regenerative ag funding raises questions [08 Environment & September, Rural News] Emissions A $20 million funding package was announced by the government in July to help “clean up Carbon certification could help farmers access waterways and create jobs”, with nearly $2 premium markets [02 September, Stuff NZ] million of the funding allocated to the Quorum Toitū Envirocare has developed New Zealand’s Sense Charitable Trust for promoting first carbon certification and reduction regenerative agriculture. Concerns have been programme for pastoral farmers, which has been raised about a potential conflict of interest used by many high profile businesses such as around Jono Frew’s role as treasurer of Quorum Sense and his co-ownership of The Warehouse and Skycity. Toitū says by Symbiosis Seeds, in relation to the possible verifying and advising on the reduction of the commercial advantage he may gain from carbon footprint, it can open up marketing people converting to regenerative agriculture. opportunities to the growing demand for sustainable products. The company has worked with Fonterra in Waikato on its Simply Milk Black gold: Farmers adopting ancient technique product which is marketed as NZ’s first carbon to help with modern environmental issues [08 zero milk. September, One News] Biochar - a soil additive carbon that holds onto Bull parent to 170,000 daughters [04 water, oxygen and nutrients – is an ancient tool September, Rural News] now being promoted to modern farming LIC’s Holstein-Friesian bull Beaner has sired practices, aiming to benefit crop growth and around 170,000 daughters around the country the environment. Jason Thomas of ST over the last eight years, and along with 3 Growers, who has been using biochar on his other bulls from the company reached the potato crop for five years, said it helped to achievement of selling 1 million semen straws. reduce commercial fertiliser costs by40-50%. LIC says Beaner’s high breeding worth and good production traits have resulted in farmers having a strong preference for the bull. Horticulture

Farming Systems Sustainable Vegetable Systems receives $4.7m [04 September, Rural News]

Sustainable Vegetable Systems, a 4-year

project established by vegetable groups and $390k funding boost for research into market Horticulture NZ, has received a further $4.7m potential of regenerative agriculture [04 in addition to the $2.8m funding from the September, Stuff NZ] Ministry for Primary Industries. The A $390,000 Government funding will boost the investments aim to promote farming practices research on commercial potential of that deliver more value and improve the regenerative agriculture. Regenerative soil environmental outcomes. Potatoes NZ chief consultant Nicole Masters warned the term executive Chris Claridge said the project would should be applied with care and “green- enable growers to accurately manage nutrient washing” around regenerative agriculture flows while maintaining quality produce. should be avoided.

Agricultural robot maker raises EUR 9.5 million [03 September, Fresh Plaza] International Saga Robotics, a Norwegian and UK based agricultural robot maker, has recently raised EUR 9.5 million to support its growth plans. The company’s Thorvald robots are used to Healthy eating takes lockdown hit: IGD [02 control mildew on strawberries and vines September, Food Navigator] across the world, with its autonomous IGD’s annual Appetite for Change report shows strawberry pickers under development and more than 57% of consumers from the UK are soon to be commercialised. considering (24%) or already changing (33%) their diets to become ‘healthier and more sustainable’. However, people have also stated Beyond the buzz: How to succeed in the ‘high- that Covid-19 lockdowns have worsened their risk market’ for nootropics [03 September, diets. IGD said the covid-19 pandemic Food Navigator] highlighted the importance of diet in our There is said to be a soaring demand for wellness, and the biggest barriers to a healthy nootropics, products that benefit mood or diet were price, taste and habit. cognitive functions, especially during and after the covid-19 pandemic. New Nutrition UK organic food and drink sales boom during Business director Julian Melltin said a growing lockdown [03 September, The Guardian] segment of business were attracted to the The UK saw a 18.7% growth in the sales of nootropics, but it is a high-risk area and organic food and drink during the covid-19 companies should see past the misleading lockdown, according to the market research hype. Ms Melltin provided advice for those in company Nielsen. Its year-on-year sales growth the nootropic space to choose ingredients is 6.1%, which is almost double the 3.2% wisely and focus on the results. growth of non-organic products for the year ending May 2020. The trade body for organic Countries ‘ignoring food systems’ in climate products Soil Association said the sector is on action plans [03 September, Food Navigator] track to hit the £2.6 billion mark by the end of A new World Wildlife Fund report says the the year, exceeding the original projection. majority of national commitments to the 2015 Paris Climate Agreement had overlooked the New Burger King restaurant innovations with whole food system, which accounts for up to conveyor belts, food lockers and solar panel 37% of all greenhouse gas emissions. It canopies [03 September, GMA] identified 16 ways for policymakers to improve Fast food chain Burger King unveiled its their mitigation, including action on food loss innovative new design “Restaurant of and waste - which the report claimed could Tomorrow” to offer flexibility catering for reduce greenhouse gas emissions by an extra dining requirements in light of the covid-19 12.5Gt CO2e annually. pandemic. In collaboration with Restaurant Brands International's in-house design group, Tyson Foods to open medical clinics at some Burger King has created or improved dining meat plants [04 September, ABC News] experiences on mobile ordering and pick-up, Tyson Foods, the Arkansas-based company areas for drive-in and walk-up order, drive-thru that processes about 20% of all beef, pork and experience, exterior dining spaces with chicken in the U.S., is planning to open medical sustainability concepts incorporated. clinics near some of its meat processing plants for the purpose of improving workers’ health and better protection from coronavirus. The new clinics will be free of charge to employees and the families for most services.

One-third of meat products in France breach labelling and traceability requirements [04 September, Food Navigator] Red Meat Results of an investigation by France’s DGCCRF shows more than 30% of meat DINZ tightens belt on expenditure [03 producers failed to comply with the mandatory September, Farmers Weekly] labelling and traceability requirements, which Deer Industry New Zealand (DINZ) prepares to became compulsory in April 2015. Food quality trim expenditures for the 2020-21 budget as the issues in the meat sector, such as the 2013 covid-19 pandemic makes it a difficult time for horsemeat scandal, have made consumers more concerned with the origins of their food. the industry. DINZ chief executive Innes Moffat Notable issues discovered include misleading said the budget review is to ensure the plans labels of origin, and businesses’ lack of align with the new priorities and future proficiency with traceability management sustainability ambitions of the sector. Costs of software. delivering farmer information will be reduced, and projected promotional activities for velvet Warnings over ‘unintended adverse will increase. Experience learnt from the consequences’ of ditching animal protein [08 lockdown also helps with cost-saving, with September, Food Navigator] examples such as using online meetings to While plant-based foods are increasingly reduce travel expenses. praised as healthier and more sustainable than animal-based products, experts warn that eliminating animal-products may lead to unintended adverse consequences. Judy Research & Buttriss of British Nutrition Foundation said diet changes towards more fruit and vegetables Development would be beneficial, but it should be Company finds 'holy grail' of stimulating plant considered with the overall nutritional needs growth [02 September, Stuff NZ] and intake especially when reducing animal Biolumic chief science officer and Massey protein consumption. professor Jason Wargent has been working on

A race to save bananas from extinction: using ultraviolet lights to treat plants for yield Wageningen and KeyGene join fight against growth better and protection from disease, Panama disease [08 September, Food which made him a finalist in the KiwiNet Navigator] research commercialisation awards. “It's like Dutch university Wageningen and plant the holy grail of agriculture. You get yield research company KeyGene are working increase and disease protection without together to protect Cavendish bananas from chemicals and without a reliance on GM the risk of extinction due to pests and [genetic modification],” said Mr Wargent. diseases. Representing around half of the total agricultural area across Africa, banana crop cultivates USD$4.3 billion yearly value for the Funding boost for regen ag research [02 region, according to International research September, Farmers Weekly] project Accelerated Breeding of Better Beef + Lamb New Zealand’s research into Bananas, which also estimates that banana regenerative agriculture has received an extra crops are achieving only 9% of its potential $390,000 from the Ministry for Primary yield due to spoilage caused by pests including Industries. Beef + Lamb New Zealand nematode and diseases such as Fusarium Wilt. launched the study earlier this year, aiming to better understand the global market and identify opportunities for NZ’s red meat exports to extract more value. The additional funding will add the wine industry to the study in addition to the sheep and beef sector.

Fonterra gets behind home-grown Covid vaccine development [02 September, The Country] Fonterra Co-operative Group is helping NZ biotech company CVC to develop covid-19 vaccine by lending bioprocessing equipment. Fonterra's Palmerston North research centre has loaned a homogeniser (a specialised equipment for breaking up particles) to CVC without charges to assist their vaccine researchers working towards first clinical trials. CVC chief executive Dr Robert Feldman said the Fonterra resource helped the company to access sophisticated equipment and save costs.

New gene-editing test a 'game changer' for New Zealand [08 September, One News] Partly funded by the Sustainability Council of New Zealand, a research project has recently developed an open-source test to detect whether a croup has been gene edited. This testing method is said to have significant implications for NZ’s high-value food producers to distinguish their GM-free products in international markets. Co-author of the research Stephanie Howard says the test is a commercial game changer, as food producers will now need to make commercial decisions with the assumption of consumers being aware of gene-edited crops.

Rural Communities

Open Country's fifth 'nauseating' smell fine, costs company $460,000 [08 September, Stuff NZ] Open Country Dairy has received its fifth fine for discharging unpleasant odour from its factory. The Waikato dairy processing company’s latest fine will cost $137,500 and the offence has now cost the company over than $460,000 in reparations. Hamilton District Court Judge Jeff Smith considered its impacts “severe” on the community and warned the company that it is to avoid facing the same charges in court again.

Organisations referenced in this week’s Field Notes include

2degrees AbacusBio Bayer Beef + Lamb New Zealand Biolumic British Nutrition Foundation Burger King CertNZ CH4 Global CVC Deer Industry New Zealand Dutch university Wageningen Fonterra Co-operative Group Franch DGCCRF Horticulture New Zealand IGD KeyGene King Honey Lewis Road Creamery LIC Marlborough District Council Massey University Ministry for Primary Industries New Nutrition Business New Zealand Veterinary Association Nielsen Open Country Dairy Potatoes NZ Quorum Sense Restaurant Brands International Saga Robotics Soil Association ST Growers Sustainability Council of New Zealand Symbiosis Seeds Toitū Envirocare Tyson Foods Westpac World Wildlife Fund

Auckland/Audit Wellington/Management Consulting Ian Proudfoot Justine Fitzmaurice 09 367 5882 04 816 4845 [email protected] [email protected]

Auckland/Agri-Food Hamilton/Private Enterprise Jack Keeys Hamish McDonald 09 363 3502 07 858 6519 [email protected] [email protected]

Auckland/Agri-Food Consultant – South Island Andrew Watene Genevieve Steven 09 367 5969 03 307 0761 [email protected] [email protected]

Auckland/Deal Advisory Farm Enterprise – South Island Charles Widdicombe Brent Love 09 367 5949 03 683 1871 [email protected] [email protected]

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Field Notes presents a summary of some of the media comment on the Agribusiness sector in the last week. The views expressed do not necessarily represent the views of KPMG but are summaries of the articles published. The information provided herein is of a general nature and is not intended to address the circumstances of any individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received nor that will it continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. © 2020 KPMG, a New Zealand partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International Cooperative (“KPMG International”). KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative ("KPMG International"), a Swiss entity.